Three Employers Have Justified Their Actions as Follows

question 30

Multiple Choice

Three employers have justified their actions as follows.Whose logic is not consistent with the logic of efficiency wage theory?

• A)Instead of spending money on an electronic timing system that monitors worker hours,Tom spends an equivalent amount of money on higher wages.
• B)Dick pays his workers less than the equilibrium wage so that they will not have the time or money to look for work somewhere else.
• C)Harry pays his workers in a developing country more than the going wage hoping that they will get a better diet and so be more productive.
• D)None of the above is consistent with the logic of efficiency wage theory.

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Definitions:

Price/Earnings Ratio

A valuation metric for a company that measures its current share price relative to its per-share earnings.

Growth Opportunities

Potential scenarios or plans that a company can undertake to increase its market share, revenues, or profitability.

Implied Share Price

The calculated value of a share based on future earnings expectations or business prospects.

Earnings Multiple

A valuation metric that indicates the ratio of a company's market price per share to its earnings per share (EPS), commonly used to gauge stock valuation.